HTSA Dealers Diversifying Operations

St. Louis - Members
of the Home Theater Specialists of America (HTSA) are coping with the economic
downturn by adding new products and services to diversify their businesses.

That was the major
takeaway from the biannual meeting of custom installers, which concluded today
at the Ritz-Carlton Hotel, here.

After cutting
costs through staff and inventory reductions, the buying group's dealers and
integrators are focused on new categories like high-performance networking and
LED lighting. The business extensions will help supplant slower sales, members
said, and position them for a bonanza when the economy recovers.

"Everyone has had
to adjust their business models to survive on less volume in this environment,"
HTSA executive director Richard Glikes told TWICE. "And once the economy comes
back, we'll be in great shape."

Glikes described
the group's 59 members as contractors that must "diversify and add more
products to the mix."

Among those
testing new waters is St. Louis-based The Sound Room, which has added cellphone
and networking systems to its repertoire, and is selling and installing solar
panels through an HTSA training partnership with Sharp.

Part of the
inspiration, said president David Young, is that "I get bored easily and want
to try new things. But you need to change the business with the changing
environment."

Young further
bolstered his business by forming an informal referral partnership with other
local companies — including a game room furnishings store, an interior
designer, an electrical contractor and an architect — which they call The
Solution Center. "We all share the same customer base, so we send customers to
one another and share leads," he told attendees during a panel discussion. The
one-stop team approach provides clients with expertise when skill sets are
limited, and helps keep sales within the group.

Young is also
laying the groundwork for future business by holding educational seminars for
consumers and the trade, and by allowing local businesses to use his sound rooms
for demos. The effort creates loyalty and establishes The Sound Room as a
destination, explained consultant Joe Zanola, and, hopefully, "they will come
back when they're ready to make a purchase or have a project."

Hargate Theatre
Vision in Palm Springs, Calif., is similarly diversifying by adding
surveillance security and lighting control, and is doing more commercial work
with local resorts, to offset the downturn in second-home installations and
falling TV prices. "We want to pick up new lines so we'll be in a good position
when the economy returns," explained general manager Michael Dean.

For Joseph
Akhtarzad, VP of Santa Monica, Calif.-based Video & Audio Center,
diversification meant a new dual-store location with Southern California
furniture chain Power of Home. "We share the cost of the lease and we also
share the traffic that each of us draws," he said.

Audio Advice, the
award-winning custom installer in Raleigh, N.C., is also adding a new location,
a combination design center and showroom that will open next month within a
former Tweeter store in Charlotte, N.C.

Jobs have tended
to be smaller but more frequent, chairman Leon Shaw told TWICE, resulting in a
net increase in business year over year. Helping to drive those new orders,
said president/CEO Scott Newnam, is a search engine optimization program
piloted by Audio Advice through an HTSA partnership with online marketing firm
AV NetResults. "We're getting customers who wouldn't have known who we are and
we're increasing our budget quarterly," he said.

Other HTSA
initiatives, noted Glikes, include an email newsletter, redesigned Web site and
an 84-page luxury magazine called HD Living for end users; a new search
engine-optimized Web site template for use by individual HTSA members; and the
creation of a charitable foundation for veterans that will provide control
devices for amputees veterans wounded in Iraq and Afghanistan.

Glikes said
business is still challenging for the $400 million group, although sales
improved in August and traffic appears to be ramping up. Membership is down by
four this year — two left the group and two closed shop — and HTSA would like
to open its ranks to four or five more companies if and when appropriate, he
said.

New vendor
partners include Renaissance Lighting, VIP Cinema Seating, Sim2 and Panasonic's
consumer division, which joins the professional products line on HTSA's dance
card. At the same time, the group has parted ways with Marantz, Klipsch and
Definitive Technologies, allowing it to play a larger role with a smaller base
of vendors, Glikes said.